October 12, 1995, E.C.B. No. 18/90/97 (57 L.C.R. 154)

 

Between:Mario A. Tancredi and
Nicole C. Tancredi
Claimants
And:Her Majesty the Queen in Right of the Province of British Columbia
as represented by the Minister of Transportation and Highways
Respondent
Before:Jeanne Harvey, Chair*
Susan E. Ross, Board Member
Sharon I. Walls, Board Member
Appearances:J. Bruce Melville, for the Claimants
Alan V. W. Hincks, for the Respondent

* Jeanne Harvey did not participate in the reasons for decision.

 

1.   INTRODUCTION

The claimants, Mr. and Mrs. Tancredi, are owners of residential property located in North Vancouver, a short distance from the Upper Levels Highway, also known as the Trans-Canada Highway. A small stream, Wagg Creek, formerly flowed through their back yard. They seek compensation for alleged damages to their property caused by diversion of the water in Wagg Creek by the Ministry of Transportation and Highways as part of the construction of an interchange at Lonsdale Avenue and the Upper Levels Highway.

The Expropriation Compensation Board ruled on October 1, 1993 that the issues of liability and quantum in this claim would be determined separately: see (1993), 52 L.C.R. 77. This decision is concerned only with issues of liability, including whether the board has jurisdiction to hear claims made under s. 18 of the Water Act, R.S.B.C. 1979, c. 429.

 

2.   BACKGROUND

The background facts are not in dispute. Mr. Tancredi has filed an affidavit in which he states that Wagg Creek flowed diagonally through the back yard when he and his wife purchased their property in 1988. The creek was incorporated into the landscaping of the property in an aesthetically pleasing manner, including stone walls bordering either side of the creek bed and a foot bridge over the creek to access the rear portion of the property. There is also an affidavit of Wilfred Dreher, the Regional Water Manager for the Lower Mainland. The chronology of events set out in these two affidavits is as follows:

October 31, 1990

The water in Wagg Creek stopped flowing through the Tancredi property because the Ministry had diverted all the water into a storm sewer as part of the construction of the interchange at Lonsdale Avenue and the Upper Levels Highway;

November 2, 1990

Mr. Tancredi applied under s. 6 of the Water Act for a licence to use 500 gallons of water per day from Wagg Creek for the operation of a fountain in his backyard;

November 5, 1990

The Ministry applied under s. 7 of the Water Act for approval of the diversion of Wagg Creek into the storm sewer;

October 31, 1991

The Regional Water Manager granted the Ministry's application for an approval under approval number 2002861;

January 31, 1992

The Regional Water Manager denied Mr. Tancredi's application for a water licence on the ground that all of the water in Wagg Creek had been diverted by the Ministry under approval number 2002861 and there was no water left in the channel within the Tancredis' property.

It was a term of the approval granted to the Ministry under the Water Act that "the holder ... shall take reasonable care to avoid damaging any land, works, trees, or other property and shall make full compensation to the owners for any damage or loss resulting from the exercise of rights granted hereunder."

 

3.   ISSUES

3.1   Claimants' Position

No land was expropriated from the Tancredis. In seeking compensation for injurious affection to their property as a result of the diversion of the water in Wagg Creek, the Tancredis look to s. 40 of the Expropriation Act, S.B.C. 1987, c. 23, and s. 18 of the Water Act. Their argument rests on the following propositions:

1. The board has jurisdiction to hear a claim for compensation for injurious affection where no land is taken under s. 25 (1) (d) and s. 40 of the Expropriation Act.

2. The various requirements for a successful claim for compensation for injurious affection where no land is taken are met because:

(a) there is a statutory basis for a claim for compensation for injurious affection in s. 18 of the Water Act;

(b) the common law requirements for a claim for compensation for injurious affection are satisfied. In particular, the requirement that damages be actionable at common law is satisfied, if necessary, by resorting to s. 18 of the Water Act which replaces the Tancredis' rights at common law as riparian land owners.

Section 40 of the Expropriation Act provides:

40. (1) In this section, "injurious affection" means injurious affection caused by an expropriating authority in respect of a work or project for which the expropriating authority had the power to expropriate land.

(2) The repeal of the Expropriation Act, R.S.B.C. 1979, c. 117, and the amendments and repeals in sections 56 to 128 shall be deemed not to change the law respecting injurious affection where no land of an owner is expropriated, and an owner whose land is not taken or acquired is, notwithstanding those amendments or repeals, entitled to compensation to the same extent, if any, had those enactments not been amended or repealed.

(3) An owner referred to in subsection (2) who wishes to make a claim for compensation for injurious affection shall make his claim by applying to the board, and the board shall hear the claim and determine

(a) whether the claimant is entitled to compensation, and

(b) if so entitled, the amount of the compensation.

Section 18 of the Water Act provides:

18. (1) Every licensee and person who has obtained approval under section 7 shall exercise reasonable care to avoid damaging land, works, trees or other property, and shall make full compensation to the owners for damage or loss resulting from the construction, maintenance, use or operation of the licensee's works.

The Tancredis say that the diversion of the water in the creek has injuriously affected their property as that term is defined in s. 40 (1) of the Expropriation Act, and that the board therefore has jurisdiction to award compensation under ss. 25 (1) (d) and 40 (3) of the Expropriation Act. Because the diversion of the water in the creek was pursuant to an approval under s. 7 of the Water Act, s. 18 of the Water Act requires those who have obtained an approval to "make full compensation to the owners for damage or loss resulting from the construction, maintenance, use or operation of the licensee's works". The Tancredis argue that s. 40 of the Expropriation Act and s. 18 of the Water Act should be read together, with s. 40 giving this board jurisdiction to make an award for injurious affection to property and s. 18 providing a statutory basis for the claim for injurious affection.

The Tancredis do not dispute that there are also common law requirements to be met for a successful claim of injurious affection where no land is taken. In particular, there is a requirement that the damages sought must have been actionable at common law, but for the statutory power authorizing the conduct causing the damage; this is also known as the actionable rule. At one time there was a common law right of action permitting a riparian landowner to claim for a diminution in the flow of water through his or her property. However, riparian rights in British Columbia have gradually been eroded over the last century by the Water Act and its predecessor statutes. The Tancredis cite the case of Steadman v. Erickson Gold Mining Corp. (1989), 56 D.L.R. (4th) 577 (B.C.C.A.) as support for the continuation of certain "fragile" riparian rights in British Columbia, despite the wide reaching provisions of the Water Act. They also argue that the common law right of riparian landowners to bring an action for compensation has been replaced by s. 18 of the Water Act and that this section now satisfies the requirement of the actionable rule.

3.2   Respondent's Position

The Ministry argues as follows:

1. Compensation for injurious affection without a taking of land under s. 40 of the Expropriation Act is not available when the project or work is under the Highway Act, R.S.B.C. 1979, c. 167, or the Ministry of Transportation and Highways Act, R.S.B.C. 1979, c. 280.

2. If compensation for injurious affection under s. 40 of the Expropriation Act is available with respect to a highway project, it is not available in this instance because the common law requirements for such claims are not present, in particular, the requirement that the damages must have been actionable at common law.

3. This board does not have jurisdiction to determine a claim for compensation under s. 18 of the Water Act.

The Ministry characterizes the diversion of the water in Wagg Creek as part of its highway project to construct the interchange on the Upper Levels Highway. It says that injurious affection under s. 40 (2) of the Expropriation Act is not available for any highway project. Section 40 (2) of the Expropriation Act preserves the law on injurious affection where no land is taken as that law existed immediately prior to the coming into force of the current Expropriation Act in 1987. The Ministry's argument is that before the enactment of the current Expropriation Act, there were provisions in both the Highway Act (s.14 (3)) and the Ministry of Transportation and Highways Act (s. 29 (3)), which stated that the (former) Expropriation Act did not apply to proceedings under these statutes. Section 67 (1) of the pre-1987 Expropriation Act specifically provided for compensation for injurious affection, including the situation in which no land was taken. According to the Ministry, the exemption of highways projects from the provisions of the pre-1987 Expropriation Act meant that there was no statutory basis in 1987 for a claim for injurious affection where no land was taken for any highway or public work project carried out under either the Highway Act or the Ministry of Transportation and Highways Act. Since s. 40 (2) of the current Expropriation Act preserves the law on injurious affection in cases where no land is taken as it existed immediately prior to the coming into force of the current Expropriation Act, the Ministry argues there continues to be no statutory basis for a claim for injurious affection for highway or public work projects pursuant to either of the highway statutes.

In the alternative, the Ministry submits that the Tancredis do not have a valid claim for injurious affection because all of the four common law requirements are not met. Those requirements were affirmed by the Supreme Court of Canada in The Queen v. Loiselle [1962] S.C.R. 624, and are set out in E.C.E. Todd, The Law of Expropriation and Compensation in Canada, 2nd ed. (Carswell Co. Ltd., Toronto, 1992) at p. 370:

(1) the damage must result from an act rendered lawful by statutory powers of the person performing an act;

(2) the damage must be such as would have been actionable under the common law, but for the statutory powers;

(3) the damage must be an injury to the land itself and not a personal injury or an injury to business or trade;

(4) the damage must be occasioned by the construction of the public work, and not by its use.

The Ministry particularly asserts that the actionable rule is not satisfied. Although the loss of water from Wagg Creek was at one time actionable as an interference with riparian rights, the provisions in the Water Act have long since replaced the common law rights of riparian owners. The Ministry relies on s. 2 of the Water Act which provides that:

2. The property in and the right to the use and flow of all the water at any time in a stream in the Province are for all purposes vested in the Crown ..., except in so far as private rights have been established under licences issued or approvals given under this ... Act.

Because the Tancredis did not have a licence or an approval for the use of the water, the Crown's property rights in the water under s. 2 took priority over any common law claim that they might have had for the loss of the water. Further, since the Tancredis do not have any statutory basis under the Water Act to bring a claim for loss of water from the creek, their rights of action at common law have been lost.

The Ministry also submits that the common law requirement for the claim to arise from the construction of a public work rather than its use is not satisfied here. It says that any damage to the Tancredis' land arose from the use of the public work, the storm sewer, and the larger highway interchange, rather than its construction.

Finally, the Ministry says that the board does not have jurisdiction to determine damage claims under s. 18 of the Water Act. The regulations under the Water Act set out the powers and duties of this board to hear claims for compensation in expropriation proceedings under s. 24 of the Water Act. However, s. 24 of the Water Act relates solely to procedures for expropriation of land under the Water Act and has no application to the present circumstances. According to the Ministry there is no authority for this board to determine damage claims under s. 18 of the Water Act.

 

4.   DISCUSSION AND ANALYSIS

4.1 Claims for Injurious Affection Arising from a Highway Project

Section 40 of the Expropriation Act has received little consideration to date. In the case of Jesperson's Brake & Muffler Ltd. v. Chilliwack (1992), 47 L.C.R. 172; aff'd (1994), 52 L.C.R. 95 (B.C.C.A.) this board held that the claimant's property was injuriously affected under s. 40, when an overpass was constructed which significantly decreased the existing access to the claimant's property. However, crucial to the board's conclusion in Jesperson was the fact that there was express statutory authority in the Municipal Act for compensation for property that was injuriously affected by construction of the overpass.

Section 40 (1) of the Expropriation Act addresses "... injurious affection caused by an expropriating authority in respect of a work or project for which the expropriating authority had the power to expropriate land." Todd, in The Law of Expropriation, at pp. 328-329, describes injurious affection to land as land that has suffered some hurt which may or may not be compensable depending on whether there is a statutory right to compensation. In this case the loss of the water in Wagg Creek constitutes a hurt to the land. The Ministry took the water as part of the construction of an interchange of two highways. Whether the diversion of the water in Wagg Creek is characterized as part of a large scale project to construct a highway interchange or as a small scale project to divert the water in the creek as part of a public work project, the diversion meets the specification of "a work or project" set out in s. 40 (1). In the course of constructing the highway interchange or diverting the water as part of a public work project, the Ministry had the power to expropriate land under s. 18 of the Ministry of Transportation and Highways Act. Therefore, the elements of s. 40 (1) are met.

The next issue is whether there is a statutory right to compensation for injurious affection in the present circumstances. The Ministry relies on s. 29 (3) of the Ministry of Transportation and Highways Act as it existed in 1987 immediately prior to the coming into force of the current Expropriation Act. This subsection excluded the former Expropriation Act, including the provision specifying compensation for injurious affection, from proceedings under the highways legislation. The Tancredis do not disagree. They make their claim on a different basis, relying on s. 18 of the Water Act rather than the Ministry of Transportation and Highways Act. However, that is not a complete answer to the issue raised by the Ministry.

Immediately prior to the coming into force of the current Expropriation Act, the Ministry of Transportation and Highways Act contained several other relevant provisions to which the Ministry failed to refer:

18. (1) The Lieutenant Governor in Council, for and in the name of Her Majesty, may acquire and take possession of any land, stream, water, watercourse, fence or wall, the appropriation of which he believes necessary for the

(a) use, construction or maintenance of a government building, highway or public work; ...

25. Compensation to be agreed on between the parties, or awarded in the manner set out in this Act for the land, stream, water, watercourse, timber, stones, gravel, sand, clay or other materials, or for any damage to them, shall be made to the owner or occupier ... of the land or property, or to the person suffering the damage ... (Emphasis added.)

26. If a person has any claim for property taken, or for alleged direct or consequent damage to property arising from the construction or connected with the execution of a government building, highway or public work undertaken at the expense of the Province, ... the person may give written notice of the claim to the minister with particulars of it and how the claim arose. The minister may, within 30 days after the notice, offer ... and unless the offer is accepted in 30 days ... the claim shall be submitted to arbitration. (Emphasis added.)

Therefore, immediately prior to the coming into force of the current Expropriation Act, property owners or persons suffering damage from projects under the Ministry of Transportation and Highways Act had a statutory basis in s. 25 for claiming compensation for "any damage to [the land, the stream or the water]," and in s. 26 for making a claim for "alleged direct or consequent damage to property arising from the construction ... of a ... highway or public work ...". Although the actual words "injurious affection" were not used, both of these provisions appear to the board to accurately describe the concept of injurious affection to property, including the situation where no property has been taken from a claimant.

The Queen in Right of British Columbia v. Tener (1982), 24 L.C.R. 266 (B.C.C.A.) is a valuable authority on this point. In Tener the provincial government had effectively denied an owner access to its mineral claims situated in a park. In analyzing the complex statutory basis that applied in this situation Lambert J.A. pointed out that, under the equivalent of ss. 25 and 26 of the Ministry of Transportation and Highways Act, an owner was entitled to compensation for pure injurious affection where no land was taken if a project was a highway or public work carried out under that Act. At pp. 273-274 he said: (Emphasis added.)

... If it [the Ministry of Highways and Public Works Act, R.S.B.C. 1960, c. 109] applies, then under s. 15 of that Act [the predecessor to s. 26 of the Ministry of Transportation and Highways Act], compensation must be given for real or personal property taken, and also for direct or consequent damage to real or personal property. On the plain interpretation of s. 15 itself, there is nothing that limits a claim either for direct or consequent damage, to property that is owned by the person from whom other property is taken, or to property that is contiguous to the property that is taken.

So, if the work was a highway and not a park and only the Ministry of Highways and Public Works Act applied, compensation would be given in each of these five cases:

(a) compensation to the owner of land taken;

(b) compensation to the owner of land not taken but which is severed from land from the same owner;

(c) compensation to the owner of land not taken when other land was taken from the same owner;

(d) compensation to the owner of land not taken when other land was taken from another owner; and

(e) compensation to the owner of land not taken when no land was taken from any one but the land suffered direct or consequent damage from the work.

The wrinkle in Tener was that, because the mineral claims were in a park, the provisions of the Park Act appeared to exclude the application of the Ministry of Highways and Public Works Act, including whatever might be recoverable for injurious affection where no land was taken under s. 15. Although the Supreme Court of Canada ultimately decided Tener on a different basis and rejected part of Lambert J.A.'s reasoning, there is nothing in either the majority or minority judgments of the Supreme Court that undermines Lambert J.A.'s analysis of the provisions equivalent to ss. 25 and 26 of the Ministry of Transportation and Highways Act: see (1985), 17 D.L.R. (4th) 1 (S.C.C.).

When the current Expropriation Act, was passed, ss. 25 and 26 of the Ministry of Transportation and Highways Act were repealed along with other sections setting out the arbitration procedure which was used where there were disputes under either the Highway Act or the Ministry of Transportation and Highways Act. Section 29 of the Ministry of Transportation and Highways Act, which excluded the former Expropriation Act from proceedings under the Ministry of Transportation and Highways Act, was also repealed.

Section 40 (2) of the Expropriation Act preserves the law on injurious affection as it existed prior to the Act coming into force. Claimants are entitled to compensation for injurious affection as if the Act had not been passed. Inasmuch as ss. 25 and 26 of the Ministry of Transportation and Highways Act provided for compensation for injurious affection, they are still in force, although the machinery for determining compensation is now in the Expropriation Act.

In this case the Ministry maintains that the construction of the interchange on the Upper Levels Highway was pursuant to highways legislation: the Ministry of Transportation and Highways Act and the Highway Act. It has not specified under which provision of these two Acts the project was undertaken. The board nevertheless concludes that, to the extent that the construction of the interchange was done pursuant to the Ministry of Transportation and Highways Act, the Tancredis have a statutory basis for claiming injurious affection under ss. 25 and 26 of that Act as it was immediately prior to the coming into force of the Expropriation Act in 1987.

Thus, in the board's opinion, the Ministry's submission that there is no statutory basis to claim for injurious affection without a taking of land, in relation to a highway project under the Ministry of Transportation and Highways Act, is plainly wrong. The requirements of s. 40 (1) of the Expropriation Act are met because the diversion of Wagg Creek caused injurious affection to the Tancredis' land and the Ministry is an expropriating authority with the power under s. 18 of the Ministry of Transportation and Highways Act to expropriate land in respect to the project, whether it is characterized as the construction of a highway interchange or the diversion of the creek as part of a public work project. The requirements of s. 40 (2) are also met because in 1987, ss. 25 and 26 of the Ministry of Transportation and Highways Act provided the necessary statutory foundation for such a claim.

4.2   Riparian Rights

While the board finds that the Tancredis have a statutory basis to advance a claim to the board under s. 40, that conclusion does not in itself establish their entitlement to compensation because the common law requirements must still be met. The threshold issue on this aspect of the case is whether the common law requirement for the damages being actionable at common law is met. Todd discusses this common law requirement in The Law of Expropriation, at pp. 373-374:

The actionable rule was considered and more specifically defined by the House of Lords in Ricket v. Metropolitan Ry. Co. (1867), L.R. 2 H.L. 175 which is the leading English case on the rule ... [T]he majority held that the dividing line between compensable and non-compensable injurious affection, where no land was taken, had to be drawn by applying the test whether the damage complained of would have been actionable at common law if the activity causing the damage had not been authorized by statute. If the answer was in the affirmative, then it was logical to conclude that the statutory remedy for injurious affection was provided in substitution for the common law action of damages which the owner would have had if the activity had not been authorized by statute.

The parties agree that at common law, and in the absence of the provisions of the Water Act, the Tancredis would have enjoyed riparian rights to the continued flow of the water in the creek through their back yard. The complete diversion of the water would have entitled them to bring an action in nuisance for the loss of the flow of water through their property. However, as previously noted, riparian rights have been largely replaced by statute in British Columbia. The history of the reduction of riparian rights in British Columbia is complex and the board was referred to a number of authorities and academic articles on the subject, including for example, M.B. Clark, "Water, Private Rights and the Rise of Regulation: Riparian Rights of Use in British Columbia, 1892-1939" (1990), 48 Advocate 253, Schillinger and Ponderosa Trout Farm v. Blacktop & Landscaping Ltd. (1977), 4 B.C.L.R. 394 (S.C.) and Steadman v. Erickson Gold Mining Corp. (1989), 56 D.L.R. (4th) 577 (B.C.C.A.).

The board finds the case of Cook v. City of Vancouver, [1914] A.C. 1077 (J.C.P.C.) the most helpful. The plaintiff, Cook, was a riparian owner of property through which a creek flowed. The defendant city applied for and obtained a licence under the Water Act of the time to divert all the water in the stream. Cook sued claiming a loss of his riparian rights to the continued flow of water. All three levels of court denied his claim and the Judicial Committee of the Privy Council stated at p. 1082:

Riparian rights under English law are of two kinds. First, there is the right to make use in certain specified ways of the water flowing by the land, and, secondly, there is the right to the continuance of that flow undiminished. The second of these classes of rights is clearly taken away by the legislation in British Columbia.

The Tancredis are similarly claiming for the loss of water flowing through their property. According to Cook, riparian rights for the loss of continued flow of water have been taken away by the Water Act. The more recent case of Steadman, relied on by the Tancredis, involved the other class of riparian rights: namely, the right to make certain uses of water flowing by the land. Since the Tancredis are claiming for diminution of water in the creek, rather than for a right to use this water, Steadman has no application. In addition, Steadman involved a contest between two private parties, neither of whom had applied for registration under the Water Act, while, in this case, the Crown eventually obtained an approval under the Water Act which gave it certain rights in relation to the Tancredis who never received a licence or an approval.

The board concludes that the Tancredis did not have any common law right to bring an action for damages for the loss of the continued flow of water through their property. Any riparian rights that they might have once enjoyed for this type of loss have long since been replaced by the provisions of the Water Act. The board does not agree that, in determining whether there is a valid claim for injurious affection under s. 40 of the Expropriation Act, the requirement that the claim be actionable at common law was replaced by s. 18 of the Water Act. The rationale for this requirement, as set out by the House of Lords in Ricket, is not met if there is already an existing statutory remedy. In this case the Water Act provides a comprehensive legislative scheme for regulating water use and there is no need to invoke s. 40 of the Expropriation Act. Thus the lack of a common law right to bring an action for damages means that even although there is a statutory basis for bringing a claim to the board for injurious affection without a taking of land, the Tancredis' compensation claim does not qualify under s. 40 of the Expropriation Act.

Because the requirement that the claim be actionable at common law is not met, the board does not need to deal with the additional common law requirement for the damages to arise from the construction of a public work project, rather than its use.

4.3   Section 18 of the Water Act

In the absence of a right of compensation under s. 40 of the Expropriation Act, is there jurisdiction for this board to determine a damage claim under s. 18 of the Water Act? As stated above, the Water Act provides a comprehensive legislative system for regulating water use. Section 18 sets out what compensation may be payable to owners such as the Tancredis by persons who have received approvals under s. 7 of the Water Act. Any compensation payable in this case would be solely dependent on construing s. 18 and the stipulations in the approval itself, which are essentially a repetition of the provisions in s. 18.

The board's jurisdiction with respect to the Water Act is set out in Part 5 of the Water Regulation, B.C. Reg. 204/88, and these provisions apply only to circumstances where land is expropriated by licensees under s. 24 of the Water Act. Since no land has been expropriated and the Tancredis' only rights to compensation would be under s. 18 of the Water Act and the terms of the approval issued under the Water Act, this board has no jurisdiction to determine such a claim which presumably must be taken to the Supreme Court of British Columbia.

 

5.   CONCLUSION

Firstly, while there is a statutory basis to bring a claim for injurious affection under s. 40 (2) of the Expropriation Act and under ss. 25 and 26 of the Ministry of Transportation and Highways Act as they existed in 1987 immediately prior to the coming into force of s. 40 (2), the requirement that the claim be actionable at common law is not satisfied. Secondly, if there can be no compensation awarded under s. 40 of the Expropriation Act, the board does not have jurisdiction to deal with a claim by the Tancredis for damages brought solely under s. 18 of the Water Act and the similar requirements in the approval issued under the Water Act. The board has found against the Tancredis on liability and dismissed their compensation claim. Costs may be spoken to at the instance of either party; no order of costs is made at this time.

 

 

Government of British Columbia